Price of Anarchy of First-Price Auctions in Agentic Markets
An agentic market is a decentralized serving-time market where AI agents bid to claim each user prompt. An agent's bid is based on its expected value for the prompt, which is the expectation of the reward for its response minus its inference costs. First-price auctions (FPAs), in which the highest bidder pays its bid and receives the prompt, are a natural way to allocate prompts in such a market,…
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